MBA Student Loans: All the Facts You Need to Know!
Quality tertiary education can be expensive. Knowing how to finance MBA student loans may be the best route to achieve your dreams!
Accessing a student loan facility to study for an MBA – or any other degree – has proven to be an essential driver for building a society that is well educated and progressive.
Were it not for student aid packages offered to millions in the United States of America seeking to advance their lives and careers, many people would get shut out of quality education which, in turn, will keep the nation stagnant.
The same principle applies in almost every other country – South Africa inclusive.
Read also: MBA Cost in South Africa
Who Finances Student Loans?
Providing loans for potential students planning to go into tertiary institutions is big business in SA and several institutions do cash in on the yearly applications.
Some of these are:
- National Student Financial Aid Scheme (NSFAS)
The NSFAS is a South African government initiative primarily created to encourage indigent students to access tertiary education.
This agency is the biggest student loan provider in South Africa at the moment with a budget of as much as R30bn set aside to provide financial aid for 690,000 South African citizens (2018 figure).
The (NSFAS) came into existence by way of the National Student Financial Aid Scheme (Act 56 of 1999) as a bursary scheme. The Department of Higher Education and Training funds the programme yearly.
Its fundamental aim is to provide financial aid to qualified students who wish to pursue academic programmes at South African public universities and other Technical and Vocational Education and Training (TVET) colleges.
- Commercial Banks
The myriad of commercial banks operating in South Africa offers similar but unique financial aid packages to potential students.
Individuals hoping to pursue an MBA degree could approach such institutions for financial aid but be ready to pay interests on the loan afterwards.
- Private Business Schools accredited as a Financial Service Provider
South African business schools are taking advantage of Financial Services Provider sections of South African law that allows them to act as a financier of student aids for individuals that register to study with them.
This service is provided in conjunction with participating banks and attracts about 12% interest on the original capital issued by the bank/financial institution.
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How Does Student Loan Financing Work in South Africa?
The three methods of financing student loans have different characteristics even though their objectives are the same – to provide financial aid to students who do not have the means to pay while studying.
- National Student Financial Aid Scheme (NSFAS)
Students from homes where the combined income of their nuclear family does not exceed R350,000 per year are eligible to apply for the loan.
Although the loan is interest-free, it must be paid back after the student has successfully graduated commenced earning a salary.
After graduating and getting employed, the student (now employed) is expected to begin repayment of the loan.
Students who pass all of their registered courses get some part of their loan converted into a bursary (a portion written off as a reward for excellence).
Click here for more information about NSFAS and how to apply
Note: the NSFAS student loan facility applies to public tertiary institutions only. To access student aid for studying an MBA programme at a private tertiary institution, read below.
Do you need a Student Loan facility to commence your MBA Degree right now? Click here!
- Commercial Banks
Several registered South African commercial banks offer individual student loans.
Such financial aids target potential working-class students.
Regardless, such loans can be accessed even if the potential MBA student is not working yet. However, he or she must present a surety that guarantees the loan.
Such a surety/guarantor must be gainfully employed and receiving at least R5,000 as salary monthly.
Two vital conditions (among others) must be met prior:
- The guarantor or employed student must have a good credit rating
- The guarantor or working student must maintain a positive affordability rating (i.e. he/she must show that their monthly income does not exceed their monthly expenditure).
If the student meets all the conditions and gets the loan approved, he/she is expected to make monthly repayments of the interest (usually at 10%) on the actual loan throughout the period of study.
Once the student has graduated, he or she is expected to commence refunding the actual capital monthly.
- Business Schools Accredited as a Financial Service Provider
This option is similar to the above but with a slight variation.
Whereas the due diligence procedure is similar to that of the banks, the apparent difference is that the student pays back the capital and interest (set at 12.5%) together monthly from the commencement of study until the loan gets liquidated.
Note, however, that the educational institution does not provide the fund, instead, they allow students to access their programmes when the bank or financial institution they are partnering with has approved the funding/loan.
- Do you need student aid to study for an MBA programme at a top business school in South Africa?
Bottom Line
So, you see, getting an MBA degree is not that difficult or out of reach. With the right student aid plan, you too can fulfil your dreams and go on to rule your world.
An MBA degree will shoot you up the ladder in your career, instilling in you all the relevant skills and knowledge required to lead people effectively, manage resources efficiently, and become a thought-leader.
Want to know more? Click here to find out what an MBA really entails and the most lucrative elective courses you can choose.
